On 6 September 2016, the Hong Kong Monetary Authority (HKMA) released a circular advising the launch of its Fintech Supervisory Sandbox (Sandbox). The Sandbox is intended to facilitate pilot trials of newly developed technologies and applications by authorized institutions (AIs) without the need to achieve full compliance with HKMA’s requirements, thereby allowing AIs to collate data and feedback and make the necessary refinements to their technology/application prior to a formal launch to market.
The HKMA has not stipulated a comprehensive list of the supervisory requirements to be relaxed in the Sandbox, but examples given by HKMA include security-related requirements for electronic banking services, and the timing of independent assessments prior to launch. Therefore, AIs are encouraged to enter into dialogue with the regulator to discuss and agree on a case by case basis the appropriate supervisory flexibility to be made available in the Sandbox.
The Sandbox comes after similar announcements in the Asia-Pacific earlier this year from the Australian Securities and Investments Commission and the Monetary Authority of Singapore, who are equally eager to spur the adoption of new technology by financial institutions, as well as HKMA’s earlier announcement in respect of setting up a fintech innovation hub in association with the Applied Science and Technology Research Institute, which will provide the systems, support and resources needed to conduct concept trials in a controlled environment with the aim of allowing the finance industry to more efficiently and collaboratively embrace new technology.
A copy of the HKMA’s circular can be accessed here.